UK Government papers, released for the first time today, underline the enthusiastic drive within the Thatcher Government towards privatising Britain's nationalised industries, including in the North Sea, on a “huge scale”.
The hitherto secret documents published by the National Archive in Kew near London show that at one meeting, involving Sir Geoffrey Howe, the Chancellor, shortly after the Conservatives’ election victory in May 1979, Nigel Lawson, who would later succeed him at the Treasury, “offered the possibility of hiving off a ‘North Sea oil assets company’ from[the publicly-owned] British National Oil Corporation, which might provide a useful third way ahead”. BNOC was formed in 1975 to maintain adequate oil supplies.
A secret paper later that month also highlighted the “potential clash between BNOC asset disposal and BNOC privatisation” and noted how “the crux of the matter” was the agreement by David Howell, the Energy Secretary, to dispose of £500m “from his area by one way or another in 1979-80”.
As “various aspects of oil asset disposals” continued to be discussed, in November of that year a confidential note referred to the Energy Secretary considering the “British Columbia model of privatisation” for the BNOC.
In a general overview of the UK economy, the economist Sir Kenneth Berrill, who headed the Cabinet Office think-tank, told the new Thatcher Government that decisions had to be made “on the rate at which we choose to deplete our North Sea oil and gas resources”.
He also highlighted the need to take an early decision on North Sea oil taxation, noting: “This is important because it can both increase the scope for cuts in personal direct taxation and maximise the balance of payments advantages from our oil.”
But by early 1981, frustrations about the pace of privatisation were spilling out within Tory ranks.
A note about the Chancellor’s meeting with Tory backbenchers revealed that London MP Tim Eggar had described the Government’s performance on denationalisation as “bloody awful”.
It went on to have Mr Eggar saying that the “failure to privatise BNOC could be laid at the door of the Treasury and the PM and nowhere else”.
But in 1982 BNOC was transferred to Britoil whose shares were subsequently sold on the stock exchange and in 1988 it was eventually sold to BP.
A year or so out from the 1983 General Election, a confidential note recorded Nicolas Ridley, the Financial Secretary to the Treasury, saying that a major theme of that forthcoming poll would be giving institutions back to the people.
Mr Ridley told colleagues that people felt "oppressed by the nationalised industries and by state control in social and educational fields. Part of the Conservative platform at the next election should be privatisation on a huge scale”.
However, Leon Brittan, the wetter Chief Secretary, intervened to say: “Only those aspects of privatisation, which directly affected people’s lives, were likely to be vote winners.”
The Tories went on to win another landslide victory in 1983, increasing their majority to 144 in the most decisive election result since Labour’s in 1945.
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